SoftBank Ramps Up Latin America Tech Investments in 2024

Japanese Giant Eyes Startups as Valuations Normalize, Boosting Regional Tech Scene
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According to Bloomberg, SoftBank Group Corp. anticipates an increase in investments in Latin American startups in 2024, aiming to capitalize on more realistic valuations following a significant market correction.

Managing Partner Juan Franck highlighted in conversation with Zijia Song and Giovanna Bellotti Azevedo, a shift towards more judicious investments, buoyed by a healthy pipeline of opportunities and a recent market rebound, signaling a promising year for tech ventures in the region.

Since launching a $5 billion fund dedicated to Latin America in 2019 and adding another $3 billion later, SoftBank has made a substantial impact, backing major companies like Nu Holdings Ltd. and Gympass.

Despite a strategic pivot to focus on managing its existing portfolio amid challenging capital markets, the bank executed only seven new investments out of over 100 evaluated companies in 2023, also marking its first divestments in the region.

SoftBank’s Latin America funds have committed $7.8 billion, with the investments’ fair value marked at $6.3 billion as of December 31, reflecting a $600 million increase from the previous year.

Franck expressed optimism for 2024, citing more reasonable valuation expectations and a deep pool of entrepreneurial talent addressing significant market needs.

The Vision Fund 2, with around $8 billion available, stands as a potential source for further investments in Latin America. SoftBank’s renewed interest in the region aligns with a broader readiness among major funds to invest in tech startups, particularly favoring capital-light businesses with solid gross margins in software and financial infrastructure.

SoftBank’s disciplined approach to investment in Latin America signifies a strategic bet on the region’s tech ecosystem’s growth potential, driven by a combination of more attractive valuations and a commitment to backing innovative solutions to pressing challenges.

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